Shortage of Warehouse Space…

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This short (9 minute) Planet Money podcast titled “Full (ware)house” covers some interesting trends in the warehouse space. One current situation is that in spite of a boom in warehouse construction, there is a shortage of space. A second trend is a movement in where warehouses are located — with them moving from rural locations, to the exurbs, suburbs and even into urban environments. The idea is to have goods stored closer to consumers for faster delivery. All this is driven by changing consumer shopping habits.

This is a great example of the effects of the pandemic. As the pandemic accelerated online shopping, companies found they were more willing to pay for higher priced storage closer to consumers. I find my students like to listen to short podcasts as a supplement to the textbook chapter. The topic can lead to interesting classroom discussion when you discuss Place in Chapters 10 and 11.

Supply Chain Woes Drive Up Prices

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My students are often curious about how the pandemic has influenced marketing strategy planning. The biggest example are the supply chain problems (Chapters 10 and 11) we read or hear about all the time. Those have clear implications for consumers who cannot find that new bike, toy, or automobile they are willing but unable to purchase. What are the marketing strategy implications?

First, there are implications for retailers (Chapter 12) who lose sales when their shelves are empty (or at least not fully stocked). That costs them sales and goodwill. Second, it can lead to higher prices (Chapters 17 and 18) which contribute to inflation (Chapter 3) which are specifically addressed in this article “Supply chain woes lead to pricy outdoor recreation products.” The article gives an example of a Kelty camping chair that will jump in price from $109 to $139 because shipping costs for a container have jumped up to 10x. All told, a great example that ties together a range of concepts in the textbook and the real world. A great example to share at the end of the semester.

Why do some brands discourage customers from buying more of them?

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This is a fascinating trend. I first noticed this with Patagonia. The clothing brand that encourages people to keep their clothes longer (recall the “Don’t Buy This Jacket” campaign). REI is on board with the “Good & Used” section of its online retail site – and in our local store. These choices seem to be a good fit with the sustainable positioning of these two brands. But more recently, I am seeing other clothing brands step into the used gear space. One example is Adidas, which has partnered with ThredUp to help customers resell used footwear.

These examples might stimulate discussion about consumerism (Chapter 19), retailing (Chapter 12), or reverse channels (Chapter 10). It also begs the question about why companies would do this? Does Adidas have the same motivations as Patagonia or REI? Does this help the company sell more new clothing – while also making money on used gear (perhaps appealing to a clientele that cannot afford these products new)? Is it all about positioning the brand as caring about the environment?

Shopping During COVID-19 Accelerates Changes in Retail

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The brick-and-mortar retail business has struggled through the pandemic. With many retailers closed or shoppers simply avoiding them, online retailers benefitted. That has also created challenges for consumer goods makers that relied on those brick-and-mortar retailers to sell their wares. This Fast Company article, “How COVID-19 accelerated a shopping revolution” describes how fashion brand Rebecca Minkoff responded and offset the loss of sales in its retail channels.

Another Fast Company article describes how omnichannel, “a multichannel selling approach in which a retailer provides a seamless customer shopping experience from computer, mobile service, or brick-and-mortar store” (definition from our textbook, Essentials of Marketing) grew in importance during the pandemic. The pandemic increased the importance of curbside pickup and online distribution. In “Can retailers meet the demands of the omnichannel revolution?” you can read examples of how some retailers adapted.

Inflation worries influence consumer behavior; how do companies respond?

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Several product categories have seen costs spike during the pandemic. While supply chains get plenty of well-deserved blame, there are more reasons than that.  These videos might provide an opening to discuss this topic in class. The Wall Street Journal video “The Surprising Ways Inflation is Hitting Diapers” (August 4, 2021), describes how diaper makers costs have risen – everything from raw materials to freight costs. In addition, changing demographics (fewer babies born) has the two big diaper companies raising prices to offset lower unit sales. The result has been an increase in diapers prices of 12% in the last year.

Along the same lines, coffee prices have also soared (up more than inflation over the last five years)– see another WSJ Video “Your Coffee Is Getting More Expensive. Here’s Why.” This article describes how shipping costs have contributed to those rising prices. Together, these articles can show your students how prices are influenced by demographic trends, raw material costs, and freight costs. And coffee (maybe diapers) are product categories students understand.